The stock market of Hong Kong will continue securities and derivatives trading as normal under severe weather conditions, in a bid to cement the bourse’s competitiveness by aligning with global practices.
Starting September 23, Hong Kong’s stock trading activities will continue as normal even when the city experiences severe weather such as a black rainstorm warning and typhoon Signal No 8 or above, Chief Executive John Lee Ka-chiu announced on Tuesday.
Under the new arrangement, investors will be able to trade Hong Kong stocks as usual through Hong Kong Exchanges and Clearing (HKEX). They can also trade A shares of the Chinese mainland through the stock connect programs with the Shanghai and Shenzhen bourse.
Hui stressed that Hong Kong Stock Exchange will provide technical support for securities firms in Hong Kong to execute remote work arrangements involved in securities and derivatives trading under severe weather conditions
Lee said that major global stock markets, including Shenzhen and Shanghai, maintain trading under inclement weather conditions. “As an international financial center with most of its transactions conducted electronically, there is no reason that Hong Kong could not do so while other markets could,” he said.
The chief executive said he expected trading under inclement weather would consolidate the competitiveness of Hong Kong Stock Exchange and further enhance the city’s role as a gateway between international and mainland markets.
“Since 2018, Hong Kong's securities and derivatives markets have been closed 11 times due to severe weather. It happened four times last year and three of them required full-day closures, making it impossible for investors to manage their investment portfolios in the Hong Kong stock market,” Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said in a Tuesday press conference.
This restricts international and mainland investors from participating in the markets of the mainland and Hong Kong through the stock and swap trading connect programs, the financial services chief argued.
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Hui stressed that Hong Kong Stock Exchange will provide technical support for securities firms in Hong Kong to execute remote work arrangements involved in securities and derivatives trading under severe weather conditions.
“This new measure responds to the long-term demands of the securities industry and investors, and is an important milestone in the digitalization of transactions in Hong Kong's financial market,” said Tan Yueheng, the lawmaker representing the Election Committee.
The measure can rectify the losses caused by the suspension of the Hong Kong stock market due to typhoons in the past, enhance the liquidity of the Hong Kong stock market and strengthen Hong Kong’s competitiveness as an international financial center, added Tan, who is also the chairman of BOCOM International Holdings Company.
“As the mainland markets of Shanghai and Shenzhen, and other overseas markets such as New York, London, Paris and Amsterdam, Japan and Singapore all maintain trading under severe weather, the implementation of this measure is imperative if the special administrative region wants to maintain the competitiveness and relevance of the Hong Kong stock market, and to live up to the name of an international finance center,” Hong Kong Investment Funds Association (HKIFA) said.
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As the Hong Kong stock market’s investor base and issuer base become more diverse and internationalized, HKIFA argued the new measure supports price discovery and mitigates arbitrage, when seamless market connectivity and market certainty are just the basic requirements for investors and issuers.
Hang Seng Indexes Company said it will ensure that all related infrastructure and operational arrangements are in place to maintain the calculation of its indexes and the real-time index data dissemination during related severe weather conditions.
